A state lawmaker is doubling down on income tax cuts that haven’t been implemented yet.
In 2014, the Republican dominated legislature overrode Governor Nixon’s veto of a measure to lower the state income tax from 6 percent to 5.5 percent. The cut is scheduled to be phased in beginning in 2017 with the stipulation the state must have income growth of at least $150 million a year.
But the sponsor of that legislation, GOP Senator Will Kraus of Lee’s Summit, has filed a proposal to double the drop from 6 percent to 5 percent.
“It’s what I originally filed” said Kraus. “We had to back-off because of compromises with the minority party. But now we’ve got a governor that will sign the tax cut bill. I’m looking forward to sitting down with Governor Greitens and seeing if that’s something he wants to get accomplished. And if he wants to get it accomplished, hopefully we’ll get it to his desk.”
Kraus’s new measure would phase in the income tax cuts at twice the rate of the existing plan to settle in at 5 percent in 5 years.
In the plan taking effect in 2017, if the $150 million threshold is reached, the tax rate will drop 0.1 percent for the year. Kraus’s new proposal double the cut to 0.2 percent.
He says the stipulation calling for increased revenues will allow the state to continue paying its bills while taxpayers are rewarded. “We wanted to make sure that we weren’t going backwards in revenue, having to go in and find ways to cut the budget (in places like) education and transportation. We wanted to make sure we were leaving the core levels of the budget where they are. But as revenue continues to go up, which typically happens, instead of spending that money, we give that back to tax payers.”
During the 2014 legislative session when the existing plan passed, Kraus had offered alternative versions of the legislation to satisfy Governor Nixon’s demand that any tax cut still fund Missouri’s K-12 foundation formula.
After those adjustments were rejected by lawmakers, Kraus discarded them and returned to his original proposal. The legislature passed it and overrode the governor’s veto.
Nixon has been critical of the legislation since then. During an early December press conference, he said “I think these breaks that don’t reward additional business activity or competitive activity or employment, but merely save folks money like that are not good policy”.
The current plan also saw opposition from the watchdog group Missouri Budget Project, which said the $150 million trigger to lower taxes would need to be much higher to cover the cost of state services.
The Missouri Chamber of Commerce endorsed the plan as a responsible approach to reducing the tax burden.
Kraus points out that income tax cuts in Missouri are being done more responsibly than in neighboring Kansas, which made deep income tax cuts without requiring increased state revenue to cover the cost. Kansas has goon through several years of hardship due to large budget deficits.